Ukraine's crushers forced to incinerate sunmeal amid high stocks, poor demand

Ukrainian crushers will be forced to dispose of sunflower meal to avoid processing shutdowns due to the overstocking of storage facilities as sunflower meal prices hit a three-year low, market sources have told Agricensus Thursday.

At least two sunflower meal producers, who declined to comment officially, report they are having to clear sunflower meal stocks through incineration.

Some trade sources working with crushers believe the option is inevitable in the short term, given the decline in sunflower meal prices, logistics difficulties, and hot weather.

Combustion of sunflower meal, in specialist boilers, allows the feed to be used as an alternative energy source to create electricity, steam, and heat - but this can only be achieved in the right equipment.

However, the lack of enough specialist equipment and the scale of the stocks suggests sunmeal in most cases is likely to be incinerated without obtaining alternative energy sources.

Meanwhile, the lack of proper storage conditions, coupled with hot weather, could also lead to fires in the product and storage areas, a situation that would be particularly unacceptable in war conditions.

The blocking of ports as a result of the Russian military invasion of Ukraine and the backdrop of a decrease in demand for sunmeal from buyers, has led to a drop in the export performance of sunmeal and overstocking of storage facilities within Ukraine.

According to market sources, selling prices for sunflower meal have decreased by more than 75% since March and are now heard at around UAH700/mt ($20/mt) to UAH2,500/mt ($71/mt), which is the lowest value for at least the last three years.

According to the state customs statistics of Ukraine, since the beginning of the season on June 19, about 2.8 million tons of sunflower meal have been exported, which is 26% lower than the export figure for the 2020/21 season.

According to USDA estimates, sunflower meal exports in the 2021/22 season are estimated at around 3.2 million tons, which is 27% lower than last season.